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From: kdj@teddy.UUCP (Kenneth D. Jordan)
Newsgroups: net.taxes,net.invest
Subject: Re: New penalty on 401k plan withdrawals
Message-ID: <3095@teddy.UUCP>
Date: Tue, 2-Sep-86 17:40:52 EDT
Article-I.D.: teddy.3095
Posted: Tue Sep  2 17:40:52 1986
Date-Received: Tue, 2-Sep-86 21:25:49 EDT
References: <2fc05008.2a75@apollo.uucp >
Reply-To: kdj@teddy.UUCP (Kenneth D. Jordan)
Organization: GenRad, Inc., Concord, Mass.
Lines: 52
Xref: mnetor net.taxes:559 net.invest:1168


 > >From: tbg@apollo.uucp (Tom Gross)
 >
 >    If they had lowered the marginal tax rates, as they did,
 >    WITHOUT adding a penalty for early withdrawal from 401K
 >    plans, everyone who had been shielding their income in 
 >    401k plans for the past couple of years could withdraw their
 >    money next year with considerably less exposure to taxes.  It may
 >    not be that 28%+15% will equal out to what your original tax would
 >    had been on your 401k contribution, if 401ks had never existed,
 >    but how much complexity do you want?
 >
 >    Instead of calling a 401k plan a "savings plan", why don't you
 >    call it a tax shelter for rich people?  You talk as though the Feds
 >    have decided to tax withdrawals from piggy banks.  
 >
 >    I might have cashed in mine (it was one of the first things I 
 >    thought of when they were talking about lowering the top rate to 
 >    27%), but it doesn't bother me that they out-flanked me on this 
 >    one.  Should it bother me?  I'm getting a TREMENDOUS tax shelter 
 >    this year and building a nice nest egg for the future; I don't feel 
 >    I need any more preferential treatment.  I guess if you think rich 
 >    people deserve more tax breaks, then adding the penalty on 401k 
 >    withdrawals would be a pisser.  
 > 
 >
 >    Tom Gross
 >    Apollo Computer, Inc.
 >    Chelmsford, MA
 >
 >

 I disagree. The 401k cannot be considered a rich mans tax shelter (especially
 now that its going to be limited to 7k/year.)  I feel that the gov't is 
 renigging on old promises (why doesn't this surprise me :-) ).

 The 401k was advertised as a means of reducing your taxable income WITH 
 the extra eye-catcher that you would be able to remove the $$ from the 
 401k for financial difficulties (eg. Buying a house, college expenses, ...).

 For those of you who invested your money for any of these reasons, you
 are now taking it in the rear from old Uncle Sammy.

 Further, according to the nightly news a couple of days ago, the polls are
 saying that the public does not agree with what the gov't is doing regarding
 this "simplification" of our tax system.  I agree with the fact that our
 tax system probably needed an overhaul, but lets face up to the facts that
 the new tax laws are going to complicate tax returns for the majority of
 filers.